Battery-powered car on the cards for BMW in bid to cut emissions

BMW, the world's leading premium car-maker, may launch an all-electric car as part of its strategy to cut greenhouse gas emissions and combat growing restrictions on urban traffic within big cities.

Norbert Reithofer, chief executive, said the group would decide later this year whether to launch a battery-powered car that would produce zero emissions but colleagues said tests had shown it was already technically feasible.

BMW has already launched prototype hydrogen-powered versions of its high-performance 7 Series and is working with General Motors and Mercedes to develop hybrid models to rival those sold by the market leader, Toyota.

The first BMW hybrid will be launched next year, consuming 20% less fuel than a conventional engine. The group is also braving traditional American consumer resistance by introducing diesel cars throughout the US this year, claiming that a Mini Cooper diesel can equal the same emissions - 104 grams per kilometre - as a Toyota Prius hybrid.

Its plans underline the auto industry's varied response to the issue of global warming. Reithofer, who has criticised EU plans to impose stringent and binding emissions targets on all new cars, told the group's annual press conference that BMW had set up a strategy unit, Project i, to work on new car and mobility concepts.

The unit, headed by Friedrich Eichiner, director of corporate and brand development, is working with other carmakers to develop models that can accommodate restrictions such as congestion charging.

BMW claimed it was on course to beat last year's pre-tax earnings of €3.87bn (£3.02bn) and record sales of more than 1.5m vehicles, despite the worsening economic outlook - particularly in the US - the soaring euro, and sharp rises in raw material prices. But it admitted that the impact of the credit crunch on consumer confidence could depress earnings and sales.

Last year currency fluctuations cost BMW €517m, while raw material price increases cost it a further €288m - more than offset by higher sales and improvements in efficiency.